ASOS continues to boost last mile solutions

17 April 2018

The online fashion giant is accelerating its already considerable investment in logistics to back up industry leading delivery and returns propositions.

In its latest results, ASOS announced it is accelerating capital investment projects – notably in distribution and logistics – around the world. Having invested just over £95m of capex in the first half, total capex is set to increase to between £230m to £250m in both this financial year (FY18) and next (FY19) as ASOS builds towards £4 billion of net sales capacity.

The retailers is finalising a £150 million revolving credit facility during this period of intense investment. Fixed asset additions in warehousing were worth £41.9 million in the six months to 28 Feb 2018. This compares to £18.9m spent on warehouse in the six months to 28 Feb 2017. Warehousing costs increased by 160bps to 9.8% of revenue.

Nick Beighton, CEO, explains: “Our customer engagement is going from strength to strength and we’ve achieved more than a billion site visits for the first time. Alongside our investment in our people and our technology, we are accelerating investment in our distribution and logistics, laying the foundation for £4 billion of net sales.”

In the company’s Report it explained: “Within warehousing, the Euro hub phase two extension is progressing at pace and to plan. Within the first half, handover of the site was completed along with delivery and commencement of installation for the automated storage system. This automated storage system is currently 50% complete and on track for completion before peak trading. Good progress is also being made on the new warehouse management system which will be installed at the start of FY19.”

The new US warehouse has also made significant progress since the start of the financial year. A variety of improvements have been made to the site in addition to the installation of a storage mezzanine and parcel despatch sorter, both of which are on track to being operational by the end of the year.

Within its UK hub at Barnsley, work is underway to increase the stockholding capacity through the construction of an additional mezzanine. This will increase capacity by a further 10% to 22 million units and is scheduled to complete by the end of April.

The company’s Report read: “All of these investments will combine to deliver future capacity for £4 billion of net sales. Once again, both the Euro hub and the UK hub saw record volumes processed over the Black Friday period. Euro hub despatched 1.9 million units in the peak seven days on a manual solution while the UK hub processed 4 million units in the same period.

Delivery and returns

The first six months of the year saw a continued focus on improving delivery and returns for customers, with 92 improvements to proposition made globally. The ramp up of fulfilment from the Euro hub has allowed ASOS to begin deploying improvements to the European proposition. Saturday delivery for both Next Day and Standard was launched into Germany along with an extension of the Saturday ordering cut off times across the EU for Next Day delivery. Click and Collect launched into Germany and Austria, adding almost 20,000 locations to the global offering. March also saw the launch of Click and Collect into Russia.

Within the UK, Next Day delivery launched into the Channel Islands and Next Day delivery cut off was improved to midnight on Sunday, in line with weekdays. New Click and Collect providers were also added, taking total coverage up to 18,000 UK locations.

“We moved in to our new 80,000 square feet Customer Care site in Leavesden, North Watford completing the project ahead of peak trading. This has allowed the in-sourcing of a higher proportion of Customer Care work that has driven increased quality of service and reduced costs,” the Report read.